FERRUM CRESCENT LIMITED (ASX/AIM/JSE:FCR) For personal … · 2014-05-04 · Moonlight Iron Ore Project Process - Concentrator The processing plant design utilised work from: •

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FERRUM CRESCENT LIMITED(ASX/AIM/JSE:FCR)

High Grade Iron Ore Development, South Africa

Moonlight Iron Ore Project(Project Update)

May 2014

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Disclaimer: This publication has been prepared by Ferrum Crescent Limited (‘FCR’, 'Ferrum' or 'the Company', ASX, AIM and JSE Code:FCR). It should not be considered as an offer or invitation to subscribe for or purchase any securities in the Company, or as an inducementto make an offer or invitation with respect to those securities. No agreement to subscribe for securities in the Company will be entered intoon the basis of this document. This publication may contain forecasts and forward-looking information. Such forecasts, projections andinformation are not a guarantee of future performance, and involve unknown risks and uncertainties. Actual results and developments willalmost certainly differ materially from those expressed or implied. A number of risks, both specific to FCR and of a general nature, mayaffect the future operating and financial performance of FCR and the value of any investment in it, including, but not limited to, economicconditions, stock market fluctuations, demand for iron and price movements for same, timing of access to infrastructure, timing ofenvironmental approvals, regulatory risks, operational risks, reliance on key personnel, reserve and resource estimations, legislation in theRepublic of South Africa ('the RSA'), Australia and other jurisdictions, foreign currency fluctuations, and mining development, constructionand commissioning risk. You should not act or refrain from acting in reliance on this presentation material. This overview of FCR does notpurport to be all-inclusive or to contain all the information that its recipients may require in order to make an informed assessment of FCRprospects. You should conduct your own investigation and perform your own analysis in order to satisfy yourself as to the accuracy andcompleteness of the information, statements and opinions contained in this presentation before making any decision with respectto FCR.

The information that relates to Exploration Results and Mineral Resources in this presentation, is based on information compiled by StewartNupen, who is registered with the South African Council for Natural Scientific Professionals (Reg. No. 400174/07) and is a member of theGeological Society of South Africa. Mr Nupen is employed by The Mineral Corporation, which provides technical advisory services to themining and minerals industry. Mr Nupen has sufficient experience which is relevant to the style of mineralisation and type of deposit underconsideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the‘Australasian Code for Reporting Exploration Results, Mineral Resources and Ore Reserves’ and as defined in the June 2009 Edition of theAIM Note for Mining and Oil and Gas Companies. Mr Nupen consents to the inclusion in this presentation of the matters based on hisinformation in the form and context in which it appears.

Disclaimer

Competent Person’s Statement

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Corporate Overview

Corporate Snapshot (as at 1st May 2014)

ASX / AIM / JSE Code FCR

Shares on Issue 382M

Market Capitalisation A$ 8.0MGBP 4.5MR$ 187.0M

Options on Issue 3.4M

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A Different Approach to Iron Ore Development

• Moonlight project in northern South Africa sits within establishedinfrastructure region

• Resource able to produce high-grade iron ore - a premium product thatsits apart from spot price

• Magnetite ore with significant metallurgical testing complete

• Established JORC resource

• BFS commenced

• Fully licensed for mining

• Major off-take and engineering partners secured

• Omani based partner looking to secure strategic product source

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Corporate structure

History of the group

Incorporated inAustralia in 2001

Listed on ASX in 2005 Acquired Ferrum Metalsin 2009

Listed on AIM in 2010 Listed on JSE in 2011 New order mining rightgranted in 2012

Introduction of BEEparty in 2014

Ferrum Crescent Limited(ultimate holding company)

Ferrum Metals Proprietary Limited

Batavia Limited

Ferrum South Africa ProprietaryLimited

Ferrum Iron Ore ProprietaryLimited

Mkhombi Amamato Proprietary Limited(BEE shareholder)

Anwar Asian Investments(an option to go to 35%)

Baphuting Bo Seleka Community Trust

Mkhombi Investments Proprietary Limited(current BEE partner)

3% effective control

11.5%

26%

100%

100%

100%

Australia

Mauritius

South Africa

3.5%

93.5% effectiveinterest (62% ondilution by AAI)

Corporate Structure

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Moonlight Project Overview

• 6Mtpa production of high quality direct reduction and blast furnace gradeiron pellets expected

• Export from Richards Bay - established deep sea port - east coast SouthAfrica

- close proximity to the high demand markets - China, SE Asia andMiddle East

• A premium product - Pellet premium drivers:

- greater pellet demand for new direct reduction iron and global blast….furnace burdens

- lump supply becomes scarcer

- China pollution controls pushing pellet premiums

- recovery in global steel markets

• Off-take related parties: Duferco;

- Duferco covers 6 Mt of iron ore pellet production

• Strong and committed board capable of developing the Moonlight Project

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Moonlight Iron Ore Project

Location

360km north of Johannesburg inLimpopo Province of South Africa

In 2012 a 30 year Mining Right wasgranted over: Moonlight, Julietta andGouda Fontein farms (53km2), by theDepartment of Minerals and Energy(South Africa).

JORC resource located entirely onfarm Moonlight 111LR- one of threeproperties within the Project.For

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Aligned Interest with South Africa

• Limpopo Province - not an established iron ore mining region of SouthAfrica with little investment or presence by majors

• Traditional domestic iron ore mines in decline

• RSA steel industry major employer needing new cost effective iron oresupply

• Premium pellet product allows for high quality blend with low costimported low-grade material and energy efficiencies

• Pellet production is in line with the Government’s push for value adding

• Growing demand for use in electric arc furnace process for steel-making

• Local Ga-Seleka community holds 3% equity in mining project.

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Community

The project area includes 30 villages, which fall into one of two communities:the Ga-Seleka (who hold a 3% interest in the Project) and Ga-Shonguanecommunities

Baseline socio-economic impact studies of the areas occupied by both theGa-Seleka and Ga-Shongoane communities situated within a 50km radiusof the mining right area are advanced

Monthly meetings are held with the Royal Council and Traditional Councilof both communities as well as updating the Lephalale Municipality onfindings and proposed initiatives

Project benefits: sustainable employment, training, industry development andexpansion, taxes, royalties and general social benefitsFor

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Environment

Ferrum Crescent is committed to operating sustainably throughout thedevelopment and ultimately operations phase of the Moonlight Project

An Environmental Impact Assessment (EIA) for the mine and concentratorrelated areas was completed and submitted to the Department of EconomicDevelopment Environment and Tourism and was undertaken in line withinternational best practice. The EIA was approved 4 April 2013

EIAs are currently being prepared for the other areas of the Project includingthe pellet plant site and pipeline route

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Geology & Mineral Resources

The Project area hosts recrystallised magnetite-bearing quartzite andassociated meta-sediments.

Drill core samples reveal medium to coarse grained, flaky magnetite mineralsembedded in silica groundmass

This has positive implications for metallurgical recoveries and operating costs

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Geology & Mineral Resources

A Mineral Resource estimate for the Project was undertaken by The MineralCorporation (South Africa). The Mineral Resources are located entirely on thefarm Moonlight 111LR with significant potential to expand the resource basewithin the Project area

Current Mineral Resources:

Category Tonne (Mt) Fe (%) SiO2 (%) Al2O3 (%)

Inferred 172.1 25.3 51.2 4.8

Indicated 83.0 27.4 50.1 4.0

Measured 52.6 31.3 47.3 2.5

Total 307.8 26.9 50.3 4.2

Future activities will focus on increasingthe quantum of Measured Resourceswithin the Moonlight Project area.

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Mining

Contract mining model for site development, overburden removal andgeneral open pit mining activities

Low stripping ratio expected: 1:1.5 during the early years of operations(relatively shallow dips with occurrence of up to 4 magnetite-bearingzones)

Feasibility requirements to be completed:• geotechnical drilling, mine design, mine reserve estimation based on

certain cut-off estimates and economic criteria• final estimate of mining costs from an adjudicated tender process for a

contract mining will be concluded

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Process - Concentrator

The processing plant design utilised work from:• Danieli (Italy) - global steel specialists)• AMEC (South Arica)

Ore beneficiation plant design incorporates only well proven unit processesand equipment

Mineralogy is a coarse grind (125 to 250 micron) enabling:• high iron recoveries• concentrate grades of 67-70% iron with < 2% silica and negligible

alumina and phosphorous (superior product quality)• lower power consumption and higher water recovery a direct

consequence

Future test work will focus on financially optimising grind size vs ironrecovery through a focused / pilot test work program

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Process - Beneficiation

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Process - Pelletiser

Pelletising agglomerates fine concentrates into a charge material suitable fordirect reduction (DR) and blast furnace (BF) applications

Moonlight concentrate serves as the perfect feedstock for any pelletising plantdue to high iron grade and low levels of deleterious material

High grade pellets from Moonlight are very attractive to the market:• improve productivity / efficiencies from BF and DR plants• superior quality / physical parameters of the pellets,• decreasing availability of lump in the market• new pollution controls being implemented globally;

Future work to optimise pelletising technology process (temperature profiling,treatment times, etc)For

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Process - Pelletizer

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Infrastructure - Pipeline

Proposed slurry line from site to thepelletiser (Thabazimbi) – 220km

In principle approvals:• road easement for first 110km• rail easement for remainder of

pipeline route

Future work:• pipeline route EIA completion• optimise pipeline design and

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Infrastructure - Power

Anticipated power usage (mining, crushing, concentrating, pelletising, watersupply and general utilities) is estimated to be 110-120 MW

New power supply being brought on line:• 3990MW Matimba Power Station (Lephalale) serving area (existing)• 4800MW Medupi Power Station under construction – first 800MW to be

commissioned in 2H 2014, full capacity 2017

Future work: finalise negotiations with Eskom for capital costs and tariffsonce mining/process demand/schedules are finalised

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Infrastructure - Rail

Strategy to rail iron pellets fromThabazimbi to Richards Bay

• 70 Mtpa of coal hauled throughRichards Bay corridor

• Route capacity to be expandedto 95 mtpa by 2018, (short-termtarget of 81 mtpa.)

Future work:• Planning & costing loading /

unloading facilities, wagon andlocomotive requirements

Unlocking the Waterberg TransnetFreight Rail First Industry Forum

24 August 2012 (Source)

• Transnet to review Projectinfrastructure needs as part offeasibility component – finalisecommercial arrangements

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Infrastructure - Port

Richards Bay, South Africa’s largest portallows panamax and capesize vessels

Port currently undergoing a significantexpansion• exclusive “magnetite” area, due for

completion in 2017/18

Future work:• Completion of pellet test work and

project scheduling

• Secure area at the port and completenegotiations on handling and storagecostsFor

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Project Schedule

The Project feasibility study has continued over the past 12 months albeitat a reduced rate

Recent additional funds allows Company to accelerate feasibility study:• drilling ( resource and reserve definition, geotechnical and

hydrogeological)• focused / pilot process test work necessary to progress mining designs

and plans, process design and engineering, infrastructure commitmentsand overall Project capital and operating cost estimates

Outlook:• Feasibility study anticipated for completion within 18 months• 30 to 36 month construction period expected.• Schedule coincides with Government infrastructure development plans• Completion of the feasibility is expected to cost approximately

A$10-13M

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Summary of Value Proposition of Project

• Advanced project – large resource defined and Mining Right granted

• Conventional open cut mining methods (with a low strip ratio), andsimple metallurgy

• Will produce high quality direct reduction and blast furnace grade ironpellets; increasing global demand and growing premium over iron oreprice

• Infrastructure availability

• Off-take agreement in place

• Strong support by RSA Government

• Ferrum management has a strong track record of developing/operatingsuccessful mines in RSAFor

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Documents

FERRUM CRESCENT LIMITED (ASX/AIM/JSE:FCR) For personal … · 2014-05-04 · Moonlight Iron Ore Project Process - Concentrator The processing plant design utilised work from: •